Friday

PROVIDENCE, R.I. — Overspending by state agencies has opened up a $42-million hole in this year's budget, according to new estimates from the state budget office.

The state departments of Children, Youth and Families; Behavioral Healthcare, Developmental Disabilities and Hospitals; Labor and Training; and Revenue were among eight agencies over budget in the first quarter of the fiscal year that started July 1, according to a memo from State Budget Officer Thomas Mullaney on Thursday.

The combined $39.4 million in projected overspending comes on top of a $11.7-million estimated increase in the cost of covering Rhode Islanders' health insurance through Medicaid. And last week the state fiscal advisors reduced by $5.4 million their estimates of how much revenue the state will collect.

Helping to offset some of that red ink: the budget office said last year's budget surplus is $14.3 million larger than initially expected, bringing the total projected deficit to $41.9 million.

The latest budget projections will be used by Gov. Gina Raimondo's budget writers as they prepare a tax and spending plan for the year starting in July 2019, and to revise the current budget.

Midyear deficits are nothing new. Last November, the state had a projected $60-million gap.

Rhode Island Medicaid spending is running $29.5 million over budget so far this year, although more than $17 million of that is federal money. Managed care was the largest piece of the projected Medicaid deficit followed long-term care and hospitals.

Changes in federal Medicaid guidelines for coverage of Hepatitis C treatments "for all patients regardless of the stage of the disease" was a major driver of Medicaid costs, the budget memo said. "This policy change accounts for $6.1 million of the $11.9-million increase in FY 2019 general revenue expenditures in the Medicaid program."

The DCYF posted the largest midyear deficit, $14.9 million, as the agency increased spending on group homes, foster care, adoption subsidies and other services to deal with 350 more children under its watch than expected.

The BHDDH projected a $9.4-million shortfall, with most of it coming for increased need for developmental disability services.

The Department of Corrections is estimated to be $7.3 million over budget due in large part to Hepatitis C treatments for inmates.

The Department of Labor and Training is running $2.6 million in the red as the declining unemployment rate has reduced some federal payments.

The Department of Revenue is projected to be $2.4 million over budget in part because the car tax phaseout is costing $1.5 million more than expected.

The Department of Human Services is $800,000 over budget due to an increase in costs for The Ride transportation program.

And the Board of Elections posted a $790,000 surplus as fewer candidates than expected took advantage of state matching funds in this year's election cycle.

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